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Treasury Secretary Henry M. Paulson Jr. on Wednesday announced another major change in the $700 billion bailout program, saying he will use the funds to aid consumer finance companies that are not banks to try to revive collapsed markets for auto loans, student loans and credit cards.

In a speech saying his earlier $250 billion bank recapitalization program is working to help revive bank lending and unfreeze capital markets, Mr. Paulson said he must now turn his focus to remedying the freeze in consumer credit securities markets that is hampering consumer access to loans.

“The important markets for securitizing credit outside of the banking system also need support. Approximately 40 percent of U.S. consumer credit is provided through securitization of credit card receivables, auto loans and student loans and similar products,” he said. “This market, which is vital for lending and growth, has for all practical purposes ground to a halt.”

“The illiquidity in this sector is raising the cost and reducing the availability of car loans, student loans and credit cards. This is creating a heavy burden on the American people and reducing the number of jobs in our economy,” he said.

The Treasury is exploring ways to use the bailout program to coax private investors back into the consumer finance market, possibly through a program of matching private investments with federal funds. He also is working with the Federal Reserve on a program to purchase the most highly rated securities tied to consumer loans to improve liquidity in the market for those loans.

“By doing so, we can lower costs and increase credit availability for consumers. Addressing the needs of the securitization sector will help get lending going again, helping consumers and supporting the U.S. economy,” he said.

In another possible broadening of the program, Mr. Paulson added that he also is exploring using the bailout program to spur new lending for commercial as well as residential real estate development.

Mr. Paulson acknowledged that aiding consumer finance firms that are outside the banking system, possibly including GMAC and other auto company finance arms that are in shaky condition, is riskier than helping banks that are regulated by the federal government.

“Broadening access in this way would bring both benefits and challenges,” he said. Because many consumer finance companies “are not directly regulated and are active in a wide range of businesses, taxpayer protections in a program of this sort would be more difficult to achieve.”

In changing the focus of the program for a second time since the bailout was enacted last month, Mr. Paulson said he is further postponing Congress’ original plan to use the funds to purchase troubled mortgages and other illiquid assets from banks and finance companies.

“Our assessment at this time is that this is not the most effective way to use [bailout] funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role,” he said.

The stock market reacted negatively to the Treasury’s change of course, which helped send the Dow Jones Industrial Average down 410 points. Mr. Paulson said at a press conference that he had no regrets.

“I will never apologize for changing a strategy or approach if the facts change,” he said.

Lawmakers have called on Mr. Paulson to use the $700 billion fund to bail out General Motors Corp., which is fast running out of cash. But Mr. Paulson repeated his belief that the legislation does not authorize him to do so. He added that while the companies are a “critical industry” for the U.S. economy, “any solution has got to be leading to long-term viability.”

House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, Wednesday agreed with Mr. Paulson that congressional authorization is needed for Treasury to provide assistance to the automakers. He said he is preparing a proposal to do so.

“It will be written in a way that we are protected” and that ensures automakers cannot use the money “imprudently,” he told reporters in Washington.

Meanwhile, General Electric Co. said the Federal Deposit Insurance Corp. has agreed to insure as much as $139 billion in debt for lending arm GE Capital Corp. GE’s finance business was able to seek FDIC debt coverage because it owns a federal savings bank. GE last month also started getting loans from the Federal Reserve through a new commercial paper program.